FINANCIAL MARKETS : Dow Revives; Bonds, Buck Weaken
Blue chips stocks snapped a three-session losing streak Tuesday in quiet trading, while long-term interest rates rose and the dollar weakened.
The Dow Jones industrial average, the market’s best-known barometer, rose 13.12 points to 3,898.70, buoyed in part by American Express, General Motors and Eastman Kodak. Those shares rose amid company news.
Although other major market indicators edged higher, declining issues outnumbered advances by about 6 to 5 on the New York Stock Exchange. Big Board volume fell to 199.86 million, the lowest on the NYSE since July 5, the day after the long Independence Day weekend. On Friday, 216.15 million shares changed hands.
Among other major market indicators, the Standard & Poor’s index of 500 stocks rose 0.87 point to 471.86, while the NYSE composite index rose 0.18 point to 260.11. The Nasdaq composite index rose 0.25 point to 759.48, while at the American Stock Exchange, the market value index rose 0.46 point to 456.00.
There was little news to move stock prices in either direction following Labor Day on Monday and Rosh Hashanah on Tuesday, said David Holt, director of technical research at Wedbush Morgan Securities.
“The problem is a lack of buyers rather than an abundance of sellers,” Holt said. “It’s difficult to come back from a three-day holiday and start doing anything immediately.”
Bond yields, meanwhile, rose in light trading Tuesday, weakened by a further selloff in the dollar and renewed investor worries about inflation.
The Treasury’s main 30-year bond yield rose to 7.53% from 7.49% on Friday, pushing its price, which moves in the opposite direction, down half a point, or $5 per $1,000 in face value.
Prices of short-term maturities were between 3/32 point and 5/32 point lower, and intermediate maturities ranged from 9/32 point to 11/32 point lower, the Telerate Inc. financial information service reported.
In the currency market, the dollar weakened further against key currencies, extending last week’s selloff, on rising demand for German marks and pessimism about U.S.-Japanese trade talks.
Trading volume was light, which exaggerated the extent of the dollar’s moves. But U.S. foreign exchange traders returning from the three-day weekend said the underlying selling pressure on the dollar was strong. They foresaw little reason to buy dollars.
The greenback closed in New York at 1.543 German marks, down from its 1.556 closing level Friday.
It also weakened to 98.64 Japanese yen, down from Friday’s 99.12.
Weak stock prices abroad also helped depress the U.S. market.
Mexican shares closed sharply higher after reversing earlier losses in a technical rebound late in the session, analysts said. The Bolsa index gained 38.04 points to close at a session high of 2,704.07, after earlier falling as low as 2,642.72.
In London, the Financial Times 100-share average was hit by the weakness of bonds and closed down 36.1 points, or 1.11%, at 3,205.4. Frankfurt’s 30-share DAX average ended down 8.62 points at 2,165.90, while Tokyo’s 225-share Nikkei average fell 15.20 points to 20,393.98.
Among the stocks giving the Dow average a boost, American Express rose 1 3/8 to 30 3/8 after the company launched a credit card it says is a better deal for users who don’t pay off balances right away.
* General Motors jumped 2 1/8 to 52 1/4, rising with the issues of other auto makers as they released good data on August car sales.
* Hilton Hotels rose 5 5/8 to 64 3/8 amid rumors the company might be acquired. Hilton denied it was considering any offers.
* Nextel Communications rose 7/8 to 23 3/8. J.P. Morgan Securities lowered a rating on the stock saying the previous, higher rating was made because of the Nextel-MCI deal, which fell apart last week.
* Kodak will sell its Clinical Diagnostics unit to Johnson & Johnson for $1.008 billion in cash, the two companies said. Kodak rose 1 1/8 to 51 1/4; Johnson & Johnson dipped 1/8 to 50.
* Acclaim Entertainment gained 1/2 to 20 5/8. The company said last week that its “motion-capture” technology is being used by Warner Bros.
* AST rose 5/16 to 13 9/16 in dividend-related trading.
* Echo Bay Mines gained 3/8 to 13 1/4 as gold stocks rose with the precious metal amid concern about inflation prompted in part by Friday’s August employment report. Many investors buy gold as a hedge against cost-of-living increases. Sunshine Mining rose 1/8 to 2 1/8 and American Barrick jumped 3/8 to 23 1/2.
